Doing Business in Chile (2013)

Chile remains one of the most stable and prosperous developing nations and consistently ranks high on international indices relating to economic freedom, transparency, and competitiveness. It also fares very well in terms of democratic development, gross domestic product per capita, freedom of the press, and was the highest ranked country in Latin America in terms of competitiveness. Chile continues to pursue market-oriented strategies, expand global commercial ties, and actively participate in international issues and hemispheric free trade. Macroeconomic stability and growing integration with international capital markets has earned Chile an A+ credit rating, the highest in Latin America. With Free Trade Agreements with Europe, China, India, and North America, Chile has given its nearly 17 million citizens unprecedented access to the world’s products and services. This offers a unique opportunity for exporters interested in expanding their businesses in arguably the most open and stable market in Latin America. Chile is number 15 among the world's food suppliers. Projections place Chile among the top ten countries in food exports by 2015, with annual exports expected to reach between USD 15 and USD 17 billion. Chile is a large producer of fish and seafood products, as well as wine, dairy and meat products and by-products. The Chilean food industry is the second largest export sector in the country, after copper. Food exports have doubled in the last 10 years. Chilean agricultural exports accounted for 10% of the country's GDP in 2009. During 2008, Chile exported approximately $11 billion of agro-industrial products, making Chile 17th among the world's food suppliers. Projections place Chile among the top ten countries in food exports by 2015, with annual exports expected to reach $15-17 billion. The country's agro-industrial industry should continue to grow based on the excellent growing conditions and good local management. The market for food processing and packaging equipment and machinery grew from $47 million in 2009 to approximately $70 million in 2010, representing an impressive 37%, mainly due to specific one-time expansion projects. Conservative projections estimate annual growth of about 10% -12% for the next five years. Chile’s Mediterranean climate and favourable geography make it qualified to produce a wide range of food products. In addition, the country is effectively a phytosanitary island which, together with strict government policies, maintain Chile free of most pests and diseases. A major advantage as a southern hemisphere producer is the ability to do counter seasonal exports to the northern hemisphere. Market Challenges Perhaps the greatest challenges to exporter firms seeking to do business in Chile are the high degree of competition and the relative market size. Even though Chile is a relatively small market (17 million people), its open trade and investment policy has attracted the attention of many foreign firms. At the same time, the small market size has led some companies to overlook Chile, leaving interesting niche markets and solid opportunities for exports. Despite Chile’s openness to new products and technology, Chilean business people are astute but tend to be more conservative and cautious than the average business person. Companies should consider this when entering the market and adjust sales expectations accordingly. While the Chilean government is committed to trying to streamline certain processes such as the time it takes to open a business or close a banking account, companies will find that operating in Chile requires patience and a tolerance for delays associated with doing paperwork and obtaining approvals. A key to competing is finding the right in-country partner. A good agent or distributor can use their business and/or social connections to open doors and overcome regulatory, as well as cultural and language barriers. Companies doing business in Chile should be aware that a relatively small number of individuals and families control a large percentage of Chilean businesses. The limited competition in many sectors provides greater opportunities for collusion among Chilean economic actors.